According to foreign media reports, Nissan Motor announced that due to its consolidated net revenue and global sales decline in the first half of fiscal year 2024, and operating margin of only 0.5%, the company plans to “take urgent measures” to reverse the business model.
Nissan said it is “facing a tough situation” and has developed a plan to achieve “healthy growth,” including cutting fixed costs by 300 billion yen ($1.9 billion) and variable costs by 100 billion yen ($649 million), as well as reducing the number of employees in the company. ($649 million) in variable costs, while maintaining a healthy free cash flow.
To achieve this, Nissan plans to cut global production capacity by 20 percent and lay off 9,000 employees worldwide.
Nissan said, “The company is implementing a variety of measures to reduce selling and administrative expenses, reduce cost of sales, and optimize its asset portfolio, prioritizing capital expenditures as well as investments in research and development.”
Nissan President and CEO Makoto Uchida voluntarily reduced his monthly salary by half and proposed to start implementing the measure immediately, while other members of the Executive Committee also voluntarily reduced their salaries.
Makoto Uchida said: “These turnaround measures do not mean that the company is downsizing. Nissan will reorganize the business to make it leaner and more resilient, and restructure the company’s management to respond quickly and flexibly to changes in the business environment. We are committed to improving the competitiveness of our products and returning Nissan to earnings growth. As a cohesive team, we are committed to working together to ensure the successful implementation of our plans.”
Compared to the same period last year, Nissan saw a decline in all of its financial metrics in the first half of fiscal year 2024, including net revenue, operating profit, operating margin and net income, and its global sales slipped to 1.6 million units.
Nissan said, “The company’s profitability was impacted by higher cost of sales and inventory optimization efforts, particularly in the U.S. market, as well as higher manufacturing costs.”
Nissan plans to accelerate the launch of new-energy vehicles in China, as well as plug-in hybrids and e-POWER technology in the U.S. market, while shortening the vehicle development cycle to 30 months.
At the same time, Nissan will strengthen cooperation with Renault Group, Mitsubishi Motors and Honda Motor, and explore more strategic partnerships in the areas of technology and software services.
Nissan also said it will appoint a chief performance officer, responsible for the company’s sales and profits, to arrive and start work by December 1st.